As if Utah Power & Light Co. and PacifiCorp didn't have enough obstacles to completing their merger, now kindred investor-owned electric utilities are fighting the deal - fearing it could impose unwanted regulatory reforms industrywide.
In a telegram sent last week, 10 of the country's major investor-owned utilities are urging other electric utilities to file objections to the Federal Energy Regulatory Commission's order approving the merger.The FERC order requires UP&L and PacifiCorp to open their interstate transmission system to competing utilities as a condition of approving the merger.
That condition "would turn our transmission systems over to public power and others at the expense of our customers and hurt system reliability. It may even be a taking of property without fair compensation," the telegram said.
The notice was sent to "a substantial number of the larger investor-owned utilities" throughout the country, said Lewis Phelps, spokesman for Southern California Edison Co., whose chairman signed the telegram along with executives from nine other electric utilities.
Also signing the plea to object were The Southern Co., American Electric Power co., Alabama Power Co., Oklahoma Gas & Electric Co., Carolina Power & Light Co., Puget Sound Power & Light Co., Centerior Energy Corp., Houston Lighting & Power Co., and Boston Edison Co.
UP&L was cautious in its reaction to the telegram, declining to say how this recent opposition will affect the merger's prospects of going through.
Numerous objections filed with the FERC could delay final federal approval of the deal for months. UP&L, PacifiCorp and other parties have until mid-December to file orders accepting or rejecting the merger, or requesting a rehearing.
"Delay is a concern, but we don't want to speculate on how appeals will delay the merger," UP&L spokesman Dave Mead said.
Phelps also declined comment on if the protesting utilities considered the impact their objections could have on the merger taking place. "We are concerned about the precedential nature of the merger not the merger itself," he said.
Both utilities agreed to merge last year and have spent more than 14 months painstakingly gaining regulatory approval of their proposed marriage. The merger, the largest among utilities in more than 50 years, would create an electric utility serving more than 1 million customers in seven Western states.
The companies contend, even though opening their transmission system to competition will reduce anticipated revenues from sales of excess power, that the merger will still result in rate cuts for UP&L customers of at least 5 percent.
"From a consumer's standpoint, any delay results in a $1.5 million impact on electric bills per month," Mead said, basing the figure on an immediate 2 percent rate reduction once the merger is effective.
"We want to get the merger through so we can get those benefits flowing.
Also holding up the merger are hearings before the Utah Public Service Commission. The commission is also concerned about the effect FERC conditions will have on Utah ratepayers.
The telegram also urges utilities to ask state regulators to file objections with the FERC. Utah PSC chairman Ted Stewart said the FERC conditions could be interpreted as unconstitutional and turn into a state's rights battle. "But if we fought it and won, then the FERC could say the merger is off."
Stewart said if UP&L can prove that Utah rates can still go down under the FERC conditions, then the PSC would not want to keep that from happening.
"It kind of puts us between a rock and a hard place."
Most of the country's investor-owned utilities belong to the Edison Electric Institute based in Washington, D.C. The institute issued a statement following the FERC approval, expressing concern over the transmission conditions.